Balancing Generosity and Fairness: How to Handle Holiday Bonuses in Your Building

’Tis the season to say thanks to your staff for their service in the form of holiday bonuses. Doling out end-of-year rewards, however, can be a fraught topic. How much is too much, and what’s not enough? What’s the right amount for supers or resident managers as opposed to doormen, concierges and porters? Aside from building bonuses, there’s the matter of individual cash tips from shareholders and unit-owners. Should you take proactive steps to encourage people to give, or stay silent and avoid any reminders altogether? The answer to all these questions is that “there are no hard-and-fast rules,” says David Baron, president of Metro Management. “Boards have to figure out what’s right for their buildings.”

Board Bonuses

Whether it’s a co-op or condo, the basic principles are the same. Bonuses are given at the year-end by the board, usually after a vote and coming from the building’s labor budget. Typical bonus amounts are one to three weeks’ of an employee’s salary. For a super or resident manager, whose salaries range from a minimum of $106,000 to an average of about $140,000, bonuses can therefore range anywhere from $2,000 to $8,000. For doormen, concierges and porters, whose average salary is $60,000 (handymen earn slightly more), the bonus amount ranges from about $1,200 to $3,500. “We have some buildings that give out $10,000, and some that give a week’s salary and add 5% to 10% on top of that,” says Steven Greenbaum, senior vice president at FirstService Residential. “The numbers can get pretty high.”

Some boards — especially those that see bonuses as a routine holiday custom — give a flat amount based on the employee’s particular job. Others view it as a reward based on merit and tenure, often working closely with management to make their decisions. “We present a spreadsheet of staff members with their name, position, date of hire and how much of a bonus they got the previous two years,” says Greenbaum. “Then we discuss and evaluate their performance that year and come up with a figure.”

A clear dividing line. Bonuses should be issued as a separate check from employee salaries and listed as holiday pay on your ledgers. Like other line items on your budget, “it’s a good idea to add a little cushion for the unexpected,” advises Andy Marks, an excutive vice president at Maxwell-Kates. “Of course, you’re always basing the next year’s budget on expenses for the current year, but you want to factor in contingencies, like an immense capital project where a super or resident manager went above and beyond and warrants a bigger bonus than you originally planned.”

Since bonuses go through payroll and are taxed, you might want to adjust the check amount accordingly. “You could ramp it up so the employees will get a check for the dollar amount you have in mind,” Greenbaum says. “If you want to give someone $1,000, you would write a check for $1,400 in order for them to get that $1,000.”

The meaning behind the numbers. No matter the size of the bonus, it’s important to explain to employees your reason and rationale, ideally in person. “If it’s a generous amount, you want to let people know that you’re rewarding them for a job well done,” says Greenbaum. “In fact, I’ve seen a trend over the last couple years where boards are handing out an extra 5% or 10% on top of the standard bonus.” On the other hand, if the bonus is lower than the previous year, or in extreme cases when there is no bonus at all, “boards should make it crystal clear to the employee that they are not performing up to par and how they need to improve,” he adds. 

Strategic thinking. Savvy boards recognize that bonuses can be a tool to retain valuable employees. “That’s especially the case with supers,” says A.J. Rexhepi, the CEO of Century Management Services. “There are about six or seven super ‘clubs’ in the city, and they all talk to each other. So everyone knows what everyone else is getting, and that spreads like wildfire.” Some boards have learned that the hard way, he adds. “They’ll lose a guy over the bonus not being big enough. So buildings really are competing not only against a market, but also competing against their neighbors.” 

Tips From Residents

In addition to awarding bonuses to staffers, boards need to decide how much they want to encourage residents to tip individually. It might be a nudge, like slipping flyers under every door or an email simply reminding people to feel free to give a gratuity at their discretion, or a more direct approach. “About half of our buildings send out a detailed list with all the same information as the spreadsheet we give the boards, but also including nicknames, since a lot of times people can’t recognize staff members’ actual names,” Greenbaum says. “In some cases, the staff help themselves and send out their own list, but only after getting approval from the managing agent and board.”

Cash pools. The most proactive buildings organize a tipping pool for their staff. Shareholders or unit-owners put whatever amount they want — anonymously — into the pool, which the board or management then distributes. Pools are more common at larger buildings, like the Plaza Tower, a 234-unit co-op on East 60th St. “The board sets different tip amounts for studios, one-bedrooms and two-bedrooms, which will automatically appear on the shareholders’ maintenance bill,” says Ira Meister, the founder of Matthew Adam Properties and the building’s managing agent. “The amount is a suggested contribution, and I’d say 95% of the people do give the suggested amount. But if you’d like to give more or less, you contact the board and they make the change on your bill.”

At some buildings, residents have set up their own pooling systems that they manage themselves. “We have a large Brooklyn co-op where shareholders started a GoFundMe page where people can make contributions,” says Greenbaum. “The donations go into a holiday tip pool for the building, which is then evenly distributed among the staff.” That approach, however, probably works best in buildings with a younger demographic, so even when offering people an online option, it’s a good idea to let people contribute by cash or check — made out to the owners’ corporation or condo — which can be put into a drop box in the lobby or an on-site manager’s office.

A formula ensures fairness. Whether tips are collected by boards or by residents, the money can be apportioned according to job title, using a points or percentage system of the total contributions. “The resident manager will get the most points or the highest percentage, and doormen and porters less,” says Meister. Some buildings, like the Plaza Tower and the Brooklyn co-op, distribute the donations equally among employees. Both systems ensure that everyone gets their fair share, especially “the people you don’t see every day, the back-of-the-house staffers who don’t interact with residents,” Meister adds.

Tipping pools are not only convenient, but also spare people the embarrassment of not giving to a particular employee. But there is a downside. Anonymity means that big tippers aren’t recognized by the staff. In addition, “you’re sort of taking away people’s discretion to make their determination based upon their own experience with building employees,” Dennis DePaola, chief legal officer at Orsid New York, points out. “If you’re going to do a pool, it should be clearly delineated how the money will be divided, and people can decide whether they want to hand extra cash to staffers and give a more personal reward.”

Bonuses and tipping-pool funds — which should be handed out as early as possible in December — speak volumes when it comes to showing appreciation for your staff. But boards aren’t restricted to giving only money. “I have one or two boards that used to give people turkeys for Thanksgiving,” Baron says. “When it comes to giving bonuses, every building has its own flavor.”